Malcolm Figueroa is a sales employee of Carefree Pools and Spas, Inc. During 2017, he was issued a company car with a fair market value of $35,000. He drove a total of 22,000 miles, used the car for 2,000 miles for personal use, and his employer paid for fuel, charging Malcolm five cents per mile. Under the lease value rule, what is the amount that must be added to Malcolm’s gross pay for 2017?

$940.83 amount to be added to Malcolm's gross pay for 2017

Explanation:

under the lease value rule as seen in the table attached

Annual lease value for a car with a market value of $35000 = $9250

Malcolm used the vehicle for personal use for = 2000 miles out of the 22000 miles

next we calculate the prorated annual lease percentage ( percentage of personal use by Malcolm ) = 2000/22000 * 100 = 9.09%

The prorated annual lease value = Annual lease value * prorated annual lease percentage = $9250 * 9.09% = $840.83

fuel paid for by employer per mile for Malcolm's personal use = 2000 * 5 cents = 10000 cents = $100

therefore amount added to Malcolm's gross pay would be = prorated annual lease + fuel charges paid by employer

=  $840.83 + $100 = $940.83